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This page contains a single entry from the blog posted on July 28, 2008 12:52 PM. The previous post in this blog was Welcome to Fresh Week. The next post in this blog is St. Tropez it ain't. Many more can be found on the main index page or by looking through the archives.

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Monday, July 28, 2008

Who's minding the store? No one

Today all the media jump on one of the big downsides of the City of Portland's much-touted "public-private partnerships": Nobody on the "public" side is keeping any sort of watch over the "private" side to see that they're living up to their end of the "partnership" agreement. Even if the handouts to the real estate sharpies are for a good purpose (usually a dubious proposition), no one in government knows or cares whether the taxpayers are being swindled. Nick "the Sardine" Fish says he's going to jump in and start up some sort of accountability, millions of dollars later. Coverage is here, here, and here.

Comments (15)

All I have to say is - How long have we been giving these breaks before we decided to finally audit them?

"Real" audits (that is, ones that include looking at the actual performance that is purchased for the money spent and not just counting how many paperclips someone used) are not done very frequently, either in Portland or at the State level. I shudder to think what a federal government audit would uncover.

I'm a little surprised that this criticism came to light and it will be very interesting to see if anything is done about it. By that I mean: if the people that took the money to create low-income housing are punished for not doing so. What would be the punishment, for instance, if someone had embezzled this money? Not much different then what happened.

Why would anyone try to get out of paying property taxes, obviously there is no need to audit the abatements. ;)

I wouldn't be surprised if people paid someone else to buy the property to make it qualify for the abatement originally, knowing that nobody was coming back to check and see if the property was being re-sold to someone that doesn't qualify for it.

I have noticed just recently that some real estate adds that mention abatement, have little print that says "for qualifying buyers".

What is wrong with the world around here?

Obvioulsy these programs never get performance audits.


"Nobody on the "public" side is keeping any sort of watch over the "private" side"
????

Ok,, but nobody on the "public" side is keeping any sort of watch over the "public" side either.

Not PDC Commissioners, city commissioners or Urban Renewal (citizen) Advisory Committees ever see a ledger of spending in UR districts.

I've got to believe the public-private partnerships cost us a whole lot more in fraud, and tax avoidance, than the $8.5 million reported in the Portland Tribune. It's not much of a story if it actually is only $10 million or less. My preference would be to shut down cityhall, and have a police and fire chief, water bureau chief, and a court of grievances run the city instead. I would feel a lot less harassed than currently, by a cityhall always bent on inventing a new tax (like plastic and paper tax) and justifying it in the name of some social cause or experiment.

Hmm...so Nick "the sardine" vows to become Nick "the sword" Fish?

Bob Clark: My preference would be to shut down cityhall, and have a police and fire chief, water bureau chief, and a court of grievances run the city instead.
JK: I have also been thinking that this might be a good idea. Does any city of Portland’s size do this?

Imagine voting for a head of PDOT that promises more bike paths, bubble curbs and streetcars creating congestion.

The monetary loss, in forgiven property taxes, the last time I looked (2003) was around $27 million annually for the abatements. This does not count the low interest loans, undermarket value property sales and fee wavers.

The big loss is in the urban renewal districts close to $75 million annually. I have posted this info at saveportland.com

You can find a list of developer bennies starting at: pdc.us/housing_services/builders_and_developers/default.asp

Thanks
JK

It has been suggested here before . . . one can only imagine what an audit would dig up. If these developers are getting a sweet deal (tax breaks for "good deeds") even sweeter (who cares whether the "good deeds" are ever completed), I wonder who gets a kickback or handout for looking the other way?

This is the part that I find disgusting:

"Rents are advertised anywhere from $1,000 to $4,000 a month but JP Morgan does not pay any taxes on its $60 million building. That's nearly $638,000 in lost taxes...

"Take the case of the Louisa - the 246-unit building was approved in 2003 but to date, auditors say the Portland Development Commission (PDC) has not received documentation that shows at least 24 of the apartments meet affordable housing standards.

"Auditors, in fact, discovered no apartments at the Louisa were affordable to families below the median income level."

They rent 246 units at rates between $1-4K. The building is worth $60 million. And they pay no taxes because they make 24 units out of the 246 "affordable" for those under the median income level?

And from I read about this, I have a hard time believing they really have units that are "affordable" unless they're renting below their stated prices.

I notice that PDC's developers' "perks" page has been recently amended:

---
New Multiple-unit Housing (NMUH)/Central City Property Tax Abatement
NOTE: This abatement program is currently inactive.
The City’s multifamily tax abatement programs are under review. The goal of this review is to provide the City Council and Planning Commission with recommendations for program changes that respond to the concerns expressed by the City Council.

Jack, as you know, this lack of performance auditing on affordable housing has been mentioned for several years back on your blog and sometimes in oblique ways in the media. It would be interesting for someone to post all the mentions of this issue and how the questions have been ignored by CoP, PDC for years.

It will show that some property owners, developers. politicians and subsequent buyers/renters have been involved in fraud.

Jenni Simonis: "Rents are advertised anywhere from $1,000 to $4,000 a month but JP Morgan does not pay any taxes on its $60 million building. That's nearly $638,000 in lost taxes...
...
They rent 246 units at rates between $1-4K. The building is worth $60 million. And they pay no taxes because they make 24 units out of the 246 "affordable" for those under the median income level?
JK: Even worse: $638k / 24 units = $26,500 /yr or $2200 / mo - twice what the rent is on the lowest priced unit. What a sweet deal get a $2200 tax break for lowering the rent on a $1000/mo unit!!

Thanks
JK

I recognize activist Jenni's name and these are the results of people Jenni loves to elect. Like so many other Portlanders who somehow got the idea long ago that electing unqualified candidates simply because they are supper liberal would be OK.

Like so many other Portlanders who somehow got the idea long ago that electing unqualified candidates simply because they are supper liberal would be OK

I agree wholeheartedly but feel that only Leonard may be a "supper liberal". The rest probably wouldn't be familiar with the term - Adams, least of all.

Another well known fact how developers, owners and politicians misuse affordable housing tax abatements is that most often the ground and second story of buildings are the least rentable, saleable because of congestion, noise, etc. of the these floors. If condos, they have the least return. So they are "offered" to achieve all the tax abatements, subsidies that one can get.

And many times the costs of these floors are inflated in costs, or expenses are attributed to these floors that are not justified to jury-rig the cost basis.

Additionally, because they are "affordable housing units" parking for each unit is reduced or non-existent, thus the total parking costs of the project is reduced.

Then there is the aspect that being a benevolent developer, the CoP politicians and planners love you more and are eager to reduce other fees like SDC, building permit charges, etc. Plus, your next project goes through because you are a "partner" with the city and meet their agenda.


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